Rupee Feels The Dollar Heat, Slides 27 Paise To 95.79 In Early Trade

Mumbai witnessed the Indian rupee slipping 27 paise to 95.79 against the US dollar in early trade on Friday. This decline was attributed to high crude oil prices and ongoing foreign portfolio outflows affecting the domestic currency. The rupee opened at 95.70 against the US dollar before further losing value to 95.79. On Thursday, the domestic currency had fallen 44 paise, closing at 95.52 against the dollar.

Crude oil prices are a significant concern for the USD-INR exchange rate, as high oil prices could raise India's import bill. Brent crude oil fell 0.76% to $108.45 per barrel but remained high due to tensions between the US and Iran and fears of potential disruptions in oil supplies via the Strait of Hormuz. Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, noted that the rupee remains vulnerable beyond the 95 level and could potentially reach 96 against the dollar, with 95 acting as a support level.

India's significant foreign exchange reserves, the active interventions of the Reserve Bank of India, and robust domestic economic growth of 7.8% offer some support to the currency. However, rising global bond yields, expensive crude oil, and foreign portfolio outflows continue to dominate the near-term outlook for the rupee. The dollar index increased 0.12% to 99.16.

Foreign Institutional Investors sold Indian equities worth a net ₹438.24 crore on Thursday, while domestic equities faced pressure. The Sensex fell 628.24 points to 74,257.69 in early trade, and the Nifty dropped 221.20 points to 23,255.10. Investors will closely monitor upcoming US and Indian inflation data for further indications on currency and interest rate movements.